Sterling Biotech, one of the leading manufacturers of pharmaceutical gelatine in the world supplies its product to pharma companies in the US and Europe. Oppenheimer Fund, another leading oversees fund, has also picked up a minority stake in the company through a block deal, according to a source close to the development of the deal.

Sterling Biotech chairman Nitin Sandesara says these funds have acquired the shares from the open market and it does not affect the promoters'' holding in the company. "Due to the recent GDR [global depository receipt] issue in the overseas market, the promoters'' holding in the company has been reduced from the earlier 46.7 per cent to 39.1 per cent." Currently, the Indian public holds a 38.79-per cent stake in the company while private corporate bodies hold 13.09 per cent.

Sterling has issued 2,328,045 GDRs, each representing six equity shares of Rs 2 each amounting to Rs 67.5 crore at a price of $6.6 per GDR. The GDRs will be listed on the Luxembourg Stock Exchange shortly after completion of regulatory requirements. With the GDR issue the equity share capital of the company has increased from Rs 14.33 crore to Rs 17.13 crore.

Sandesara says in order to maintain the promoters'' holding post the GDR issue, the board of directors has decided to offer 42,00,000 equity shares of Rs 2 each on a preferential basis to the promoters, at a price determined under the guidelines issued by the Securities and Exchange Board of India.

He says the proceeds of the GDR issue will be utilised to fund the expansion programme envisaged by the company. The company has plans to increase the capacity of gelatine by 70 per cent. The total cost of the project, around Rs 188 crore, is being funded through the GDR proceeds, internal accruals and borrowings.